The Nasdaq Composite index fell about 2.5 percent on Monday, hit by a slump in Apple Inc shares after two suppliers cut their forecasts, sparking a selloff in other iPhone component makers and weighing on technology stocks in general.
Apple shares fell 4.7 percent to $209.67, their lowest since July 27, after Lumentum Holdings Inc, the main supplier for Face ID technology, and screen maker Japan Display Inc cut their forecasts.
Lumentum plunged 31 percent and dragged down other Apple suppliers, many of them chipmakers such as Cirrus Logic Inc, Qorvo Inc and Skyworks Solutions Inc.Advertisement
The technology sector, which has fueled much of the U.S. stock market’s bull run, fell 3.3 percent, while the Philadelphia SE Semiconductor index dropped 4.4 percent.
“The valuation in tech sector could potentially go lower and the semiconductors are really going to weigh in the near-term, especially with the fresh releases in numbers and the China situation,” said Lindsey Bell, investment strategist at CFRA Research in New York.
“You always have regulation concern with tech, and with semis, we’re hitting a low with the business cycle and that’s a big concern.”
Earlier, a rebound in oil prices had offered some relief to energy stocks, but they succumbed to the broader selling pressure, with the S&P energy index down 1.3 percent.
At 11:51 a.m. ET the Dow Jones Industrial Average was down 456.55 points, or 1.76 percent, at 25,532.75, the S&P 500 was down 44.59 points, or 1.60 percent, at 2,736.42 and the Nasdaq Composite was down 190.64 points, or 2.57 percent, at 7,216.27.
A holiday in the U.S. bond markets for Veterans Day could keep trading volumes muted, analysts said.
“With the bond market closed, there is a lack of catalyst to push the market higher,” said Bell.
Nine of the 11 major S&P sectors were lower, with slight gains seen in the defensive real estate and utilities sectors.
Goldman Sachs Group Inc fell 5.8 percent, the most on the Dow. The financial sector declined 1.6 percent.
Altria Group Inc fell 1.8 percent and Philip Morris International Inc dropped about 1.2 percent after the Wall Street Journal reported that the U.S. health regulator is planning to ban menthol cigarettes.
Athenahealth Inc rose 9.7 percent after private equity firm Veritas Capital and hedge fund Elliott Management agreed to acquire the healthcare software maker for $5.5 billion in cash.
Declining issues outnumbered advancers for a 2.41-to-1 ratio on the NYSE and a 3.05-to-1 ratio on the Nasdaq.
The S&P index recorded 28 new 52-week highs and 10 new lows, while the Nasdaq recorded 13 new highs and 113 new lows.